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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

__________________________________
 Form 10-Q
__________________________________

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934

For the transition period from ______________ to ______________
 
Commission File Number:  000-19599

WORLD ACCEPTANCE CORPORATION
(Exact name of registrant as specified in its charter.)

South Carolina
 57-0425114
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)

104 S Main Street
Greenville,South Carolina29601
(Address of principal executive offices)
(Zip Code)

(864)298-9800
(registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, no par valueWRLD
The NASDAQ Stock Market LLC
(NASDAQ Global Select Market)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
1


 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated filerAccelerated filer
  
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x

The number of outstanding shares of the issuer’s no par value common stock as of January 29, 2021 was 6,804,681.

2


 WORLD ACCEPTANCE CORPORATION
FORM 10-Q

TABLE OF CONTENTS

Item No.ContentsPage
GLOSSARY OF DEFINED TERMS
PART I - FINANCIAL INFORMATION 
1.Consolidated Financial Statements (unaudited):
 Consolidated Balance Sheets as of December 31, 2020 and March 31, 2020
 Consolidated Statements of Operations for the three and nine months ended December 31, 2020 and December 31, 2019
 Consolidated Statements of Shareholders' Equity for the three and nine months ended December 31, 2020 and December 31, 2019
 Consolidated Statements of Cash Flows for the nine months ended December 31, 2020 and December 31, 2019
 Notes to Consolidated Financial Statements
2.Management's Discussion and Analysis of Financial Condition and Results of Operations
3.Quantitative and Qualitative Disclosures about Market Risk
4.Controls and Procedures
PART II - OTHER INFORMATION
1.Legal Proceedings
1A.Risk Factors
2.Unregistered Sales of Equity Securities and Use of Proceeds
3.Defaults Upon Senior Securities
4.Mine Safety Disclosures
5.Other Information
6.Exhibits
EXHIBIT INDEX
SIGNATURES

Introductory Note: As used herein, the "Company," "we," "our," "us," or similar formulations include World Acceptance Corporation and each of its subsidiaries, unless otherwise expressly noted or the context otherwise requires that it include only World Acceptance Corporation. All references in this report to "fiscal 2021" are to the Company’s fiscal year ending March 31, 2021; all references in this report to "fiscal 2020" are to the Company's fiscal year ended March 31, 2020; and all references to "fiscal 2019" are to the Company’s fiscal year ended March 31, 2019.

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GLOSSARY OF DEFINED TERMS

The following terms may be used throughout this Report, including consolidated financial statements and related notes.

TermDefinition
ASUAccounting Standards Update
CECLCurrent Expected Credit Loss
CEOChief Executive Officer
CFOChief Financial Officer
CFPBU.S. Consumer Financial Protection Bureau
Compensation CommitteeCompensation and Stock Option Committee
Customer TenureThe number of years since a customer was first serviced by the Company
DOJU.S. Department of Justice
EBITDAEarnings before interest, taxes, depreciation, and amortization
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
G&AGeneral and administrative
GAAPU.S. generally accepted accounting principles
IRSU.S. Internal Revenue Service
LIBORLondon Interbank Offered Rate
Option Measurement PeriodThe 6.5 year performance period beginning on September 30, 2018 and ending on March 31, 2025 over which the Performance Options are eligible to vest, following certification by the Compensation Committee of achievement
PCDPurchased Assets with Credit Deterioration
Performance OptionsPerformance-based stock options
Performance Share Measurement PeriodThe 6.5 year performance period beginning on September 30, 2018 and ending on March 31, 2025 over which the Performance Shares are eligible to vest, following certification by the Compensation Committee of achievement
Performance SharesService- and performance-based restricted stock awards
Rehab RatePercentage of 91 days or more delinquent that do not charge off
Restricted StockService-based restricted stock awards
SECU.S. Securities and Exchange Commission
Service OptionsService-based stock options
TALTax Advance Loan

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PART I.  FINANCIAL INFORMATION

WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 December 31, 2020March 31, 2020
ASSETS  
Cash and cash equivalents$9,690,662 $11,618,922 
Gross loans receivable1,264,530,315 1,209,871,366 
Less:  
Unearned interest, insurance and fees(335,055,919)(308,980,724)
Allowance for credit losses(113,467,361)(96,487,856)
Loans receivable, net816,007,035 804,402,786 
Right-of-use asset (Note 6)93,144,480 101,686,918 
Property and equipment, net26,382,402 24,761,108 
Deferred income taxes, net26,507,211 23,257,985 
Other assets, net28,896,627 28,547,950 
Goodwill7,370,791 7,370,791 
Intangible assets, net24,886,162 24,448,477 
Assets held for sale (Note 2)1,143,528 3,991,498 
Total assets$1,034,028,898 $1,030,086,435 
 
LIABILITIES & SHAREHOLDERS' EQUITY  
Liabilities:  
Senior notes payable$539,600,000 $451,100,000 
Income taxes payable852,920 4,965,302 
Lease liability (Note 6)94,384,535 102,759,386 
Accounts payable and accrued expenses40,329,254 59,298,680 
Total liabilities675,166,709 618,123,368 
Commitments and contingencies (Notes 6 and 12)
Shareholders' equity:  
Preferred stock, no par value Authorized 5,000,000, no shares issued or outstanding
  
Common stock, no par value Authorized 95,000,000 shares; issued and outstanding 6,765,778 and 7,807,834 shares at December 31, 2020 and March 31, 2020, respectively
  
Additional paid-in capital240,805,369 227,214,577 
Retained earnings118,056,820 184,748,490 
Total shareholders' equity358,862,189 411,963,067 
Total liabilities and shareholders' equity$1,034,028,898 $1,030,086,435 

See accompanying notes to consolidated financial statements.

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WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three months ended December 31,Nine months ended December 31,
2020201920202019
Revenues:  
Interest and fee income$114,885,857 $130,224,337 $333,632,164 $379,225,518 
Insurance income, net and other income16,059,793 16,771,747 45,621,340 47,785,665 
Total revenues130,945,650 146,996,084 379,253,504 427,011,183 
Expenses:   
Provision for credit losses28,857,443 55,219,470 80,608,470 149,478,577 
General and administrative expenses:  
Personnel46,699,999 49,375,486 138,154,915 151,445,733 
Occupancy and equipment15,058,226 13,544,378 41,755,200 40,455,146 
Advertising6,660,129 8,181,106 14,527,909 20,560,667 
Amortization of intangible assets1,377,250 1,390,934 4,045,496 3,603,528 
Other8,079,467 18,065,823 26,292,070 34,721,399 
Total general and administrative expenses77,875,071 90,557,727 224,775,590 250,786,473 
Interest expense7,304,531 7,130,178 18,759,198 17,861,323 
Total expenses114,037,045 152,907,375 324,143,258 418,126,373 
Income (loss) before income taxes16,908,605 (5,911,291)55,110,246 8,884,810 
Income taxes2,417,999 356,293 11,711,371 4,030,821 
Net income (loss)$14,490,606 $(6,267,584)$43,398,875 $4,853,989 
Net income (loss) per common share:   
Basic$2.32 $(0.87)$6.58 $0.62 
Diluted$2.25 $(0.87)$6.44 $0.59 
Weighted average common shares outstanding:  
Basic6,233,961 7,220,938 6,593,135 7,842,689 
Diluted6,452,385 7,220,938 6,743,649 8,163,307 

See accompanying notes to consolidated financial statements.

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WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Three months ended December 31, 2020
Common Stock
SharesAdditional Paid-in CapitalRetained EarningsTotal Shareholders' Equity
Balances at September 30, 20207,002,080 $237,547,566 129,727,585 367,275,151 
Proceeds from exercise of stock options18,205 1,248,999  1,248,999 
Common stock repurchases(238,452) (26,161,371)(26,161,371)
Restricted common stock expense under stock option plan, net of cancellations ($2,889,656)
(16,055)1,154,157  1,154,157 
Stock option expense 854,647  854,647 
Net income  14,490,606 14,490,606 
Balances at December 31, 20206,765,778 $240,805,369 118,056,820 358,862,189 

Three months ended December 31, 2019
Common Stock
SharesAdditional Paid-in CapitalRetained EarningsTotal Shareholders' Equity
Balances at September 30, 20197,945,842 $218,135,573 175,101,637 393,237,210 
Proceeds from exercise of stock options13,709 935,877 — 935,877 
Common stock repurchases —   
Restricted common stock expense under stock option plan, net of cancellations ($4,229,509)
(27,538)933,268 — 933,268 
Stock option expense— 1,168,033 — 1,168,033 
Net loss— — (6,267,584)(6,267,584)
Balances at December 31, 20197,932,013 $221,172,751 168,834,053 390,006,804 

Nine months ended December 31, 2020
Common Stock
SharesAdditional Paid-in CapitalRetained EarningsTotal Shareholders' Equity
Balances at March 31, 20207,807,834 $227,214,577 184,748,490 $411,963,067 
Proceeds from exercise of stock options33,776 2,255,824  2,255,824 
Common stock repurchases(1,024,870) (88,848,296)(88,848,296)
Restricted common stock expense under stock option plan, net of cancellations ($3,173,735)
(50,962)8,347,347  8,347,347 
Stock option expense 2,987,621  2,987,621 
Cumulative effect of adoption of ASC 326  (21,242,249)(21,242,249)
Net income  43,398,875 43,398,875 
Balances at December 31, 20206,765,778 $240,805,369 118,056,820 $358,862,189 

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Nine months ended December 31, 2019
Common Stock
SharesAdditional Paid-in CapitalRetained EarningsTotal Shareholders' Equity
Balances at March 31, 20199,284,118 $198,125,649 353,990,976 $552,116,625 
Proceeds from exercise of stock options69,181 4,589,974 — 4,589,974 
Common stock repurchases(1,392,180)— (190,010,912)(190,010,912)
Restricted common stock expense under stock option plan, net of cancellations ($4,476,159)
(29,106)14,062,985 — 14,062,985 
Stock option expense— 4,394,143 — 4,394,143 
Net income— — 4,853,989 4,853,989 
Balances at December 31, 20197,932,013 $221,172,751 168,834,053 $390,006,804 

See accompanying notes to consolidated financial statements.

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WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended December 31,
 20202019
Cash flow from operating activities:  
Net income$43,398,875 $4,853,989 
Adjustments to reconcile net income to net cash provided by operating activities:  
Amortization of intangible assets4,045,496 3,603,528 
Amortization of investment in historic tax credits1,302,288 434,096 
Amortization of debt issuance costs489,582 389,445 
Provision for credit losses80,608,470 149,478,577 
Depreciation7,294,907 5,268,517 
Loss on sale of assets held for sale37,579  
Gain on sale of property and equipment(153,338)(106,703)
Deferred income tax benefit4,136,893 (5,080,919)
Compensation related to stock option and restricted stock plans, net of taxes and adjustments14,508,703 22,933,287 
Gain on sale of finance receivables(24,628) 
Change in accounts:  
Other assets, net(1,596,210)(12,495,302)
Income taxes payable(4,112,382)(2,261,843)
Accounts payable and accrued expenses(18,969,426)3,550,935 
Net cash provided by operating activities130,966,809 170,567,607 
Cash flows from investing activities:  
Increase in loans receivable, net(106,901,743)(244,483,146)
Net assets acquired from acquisitions, primarily loans(14,364,043)(43,105,296)
Increase in intangible assets from acquisitions(4,483,180)(13,294,761)
Purchases of property and equipment(8,985,589)(8,037,189)
Proceeds from sale of finance receivables449,327  
Proceeds from sale of assets held for sale2,810,391  
Proceeds from sale of property and equipment222,725 153,441 
Net cash used in investing activities(131,252,112)(308,766,951)
Cash flow from financing activities:  
Borrowings from senior notes payable283,576,750 473,291,400 
Payments on senior notes payable(195,076,750)(141,500,000)
Debt issuance costs associated with senior notes payable(376,750)(991,400)
Proceeds from exercise of stock options2,255,824 4,589,974 
Payments for taxes related to net share settlement of equity awards(3,173,735)(4,476,159)
Repurchase of common stock(88,848,296)(190,010,912)
Net cash provided by (used in) financing activities(1,642,957)140,902,903 
Net change in cash and cash equivalents(1,928,260)2,703,559 
Cash and cash equivalents at beginning of period11,618,922 9,335,433 
Cash and cash equivalents at end of period$9,690,662 $12,038,992 
Supplemental Disclosures:
Interest paid during the period$17,723,748 $16,091,487 
Income taxes paid during the period$12,101,860 $22,135,053 
See accompanying notes to consolidated financial statements.
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WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The consolidated financial statements of the Company at December 31, 2020 and for the three and nine months then ended were prepared in accordance with the instructions for Form 10-Q and are unaudited; however, in the opinion of management all adjustments (consisting only of items of a normal, recurring nature) necessary for a fair presentation of the financial position at December 31, 2020, and the results of operations and cash flows for the periods ended December 31, 2020 and 2019, have been included. The results for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The consolidated financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended March 31, 2020, included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020, as filed with the SEC. In addition to the "Critical Accounting Policies" impacted by the new CECL standard described below, the Company applies the accounting policies contained in Note 1 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended March 31, 2020. The Company believes that the disclosures are adequate to make the information presented not misleading. Certain reclassifications have been made to the amounts previously reported to conform to the current period presentation.

NOTE 2 – ASSETS HELD FOR SALE

In the fourth quarter of fiscal 2020 the Company moved its corporate headquarters from properties it owned outright in Greenville, South Carolina to leased office space in downtown Greenville, South Carolina. Under ASC 360-10, the properties met the criteria for classification as held for sale as of March 31, 2020.

During the second quarter of fiscal 2021 the Company completed the sale of two of the three buildings held for sale, resulting in an aggregate loss of $37,579. The loss on sale of assets held for sale is included as a component of insurance income, net and other income in the Company's Consolidated Statement of Operations. The Company expects to complete the sale of the third, and final, building held for sale within the next twelve months.

The following table reconciles the major classes of assets held for sale to the amounts presented in the Consolidated Balance Sheets:
December 31, 2020March 31, 2020
Assets held for sale:
Property and equipment, net$1,143,528 $3,991,498 
Total assets held for sale$1,143,528 $3,991,498 

NOTE 3 – SUMMARY OF SIGNIFICANT POLICIES

Nature of Operations

The Company is a small-loan consumer finance company headquartered in Greenville, South Carolina that offers short-term small loans, medium-term larger loans, related credit insurance products and ancillary products and services to individuals who have limited access to other sources of consumer credit. The Company offers income tax return preparation services to its loan customers and other individuals.

Seasonality

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The Company's loan volume and corresponding loans receivable follow seasonal trends. The Company's highest loan demand generally occurs from October through December, its third fiscal quarter. Loan demand is generally lowest and loan repayment highest from January to March, its fourth fiscal quarter. Loan volume and average balances remain relatively level during the remainder of the year. Consequently, the Company experiences significant seasonal fluctuations in its operating results and cash needs. Operating results for the Company's third fiscal quarter are generally lower than in other quarters and operating results for its fourth fiscal quarter are generally higher than in other quarters.

Allowance for credit losses

Refer to Note 5, “Finance Receivables and Allowance for Credit Losses,” in this Quarterly Report on Form 10-Q for information regarding the Company's adoption of the CECL allowance model on April 1, 2020 and a description of the methodology it utilizes.

Reclassification

The Company has made certain adjustments to its treatment of historic tax credits purchased during fiscal 2020 since it filed its Report on Form 10-Q for the quarterly period ended December 31, 2019. The adjustments correctly present the Company’s election to account for historic tax credits purchased using the income statement method in conjunction with the flow-through method. Under this approach, the deferred tax liability related to the difference between the book and tax basis in the underlying historic tax credit investment is recorded in the tax provision and reversed over the same period as the amortization of the historic tax credit investment. As a result of these corrections, the below line items have been adjusted as follows:

CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended December 31, 2019Nine months ended December 31, 2019
As originally filedAdjustmentsAs revisedAs originally filedAdjustmentsAs revised
Insurance income, net and other income$16,854,871 $(83,124)$16,771,747 $47,868,789 $(83,124)$47,785,665 
Total revenues147,079,208 (83,124)146,996,084 427,094,307 (83,124)427,011,183 
Other expense17,631,727 434,096 18,065,823 34,287,303 434,096 34,721,399 
Total general and administrative expense90,123,631 434,096 90,557,727 250,352,377 434,096 250,786,473 
Total expenses152,473,279 434,096 152,907,375 417,692,277 434,096 418,126,373 
Income (loss) before income taxes(5,394,071)(517,220)(5,911,291)9,402,030 (517,220)8,884,810 
Income tax expense$429,997 $(73,704)$356,293 $2,397,698 $1,633,123 $4,030,821 
Net income (loss)$(5,824,068)$(443,516)$(6,267,584)$7,004,332 $(2,150,343)$4,853,989 

Recently Adopted Accounting Standards

Measurement of Credit Losses on Financial Instruments

ASU 2016-13 (and all subsequent ASUs on this topic) introduce the CECL model, a new credit loss methodology, replacing multiple existing impairment methods in current GAAP, which generally require that a loss be incurred before it is recognized. The amendments in this ASU require loss estimates be determined over the lifetime of the asset and broaden the information that an entity must consider in developing its expected credit losses. The ASU does not specify a method for measuring expected credit losses and allows an entity to apply methods that reasonably reflect its expectations of the credit loss estimate based on the entity’s size, complexity, and risk profile. In addition, the disclosures of credit quality indicators in relation to the amortized cost of financing receivables, a current disclosure requirement, are further disaggregated by year of origination.

The Company adopted this ASU (and all subsequent ASUs on this topic) as of April 1, 2020 using the modified retrospective approach. The adoption of this pronouncement resulted in the recognition of a $28.6 million increase in the allowance for credit losses on our opening balance sheet as of April 1, 2020, with a corresponding net-of-tax $21.2 million reduction in retained earnings and a $7.4 million increase to deferred income taxes, net.

Recently Issued Accounting Standards Not Yet Adopted
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We reviewed all newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on the consolidated financial statements as a result of future adoption.

NOTE 4 – FAIR VALUE

Fair Value Disclosures

The Company may carry certain financial instruments and derivative assets and liabilities at fair value measured on a recurring or nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Company measures the fair values of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Fair value measurements are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less active.
Level 3 – Unobservable inputs for assets or liabilities reflecting the reporting entity’s own assumptions.

The Company’s financial instruments consist of cash and cash equivalents, loans receivable, net, and senior notes payable. Fair value approximates carrying value for all of these instruments. Loans receivable are originated at prevailing market rates and have an average life of approximately eight months. Given the short-term nature of these loans, they are continually repriced at current market rates. The Company’s revolving credit facility has a variable rate based on a margin over LIBOR and reprices with any changes in LIBOR. The Company also considers its creditworthiness in its estimation of fair value.

The carrying amounts and estimated fair values of financial assets and liabilities disclosed but not carried at fair value and their level within the fair value hierarchy are summarized below.
December 31, 2020March 31, 2020
Input LevelCarrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value
ASSETS
Cash and cash equivalents1$9,690,662 9,690,662 $11,618,922 11,618,922 
Loans receivable, net3816,007,035 816,007,035 804,402,786 804,402,786 
LIABILITIES
Senior notes payable3539,600,000 539,600,000 451,100,000 451,100,000 

The carrying amounts and estimated fair values of amounts the Company measures at fair value on a non-recurring basis, which are limited to the Company's assets held for sale, are summarized below.
December 31, 2020March 31, 2020
Input LevelCarrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value
ASSETS
Assets held for sale2$1,143,528 $1,143,528 $3,991,498 $3,991,498 


The Company re-valued its corporate headquarters in Greenville, South Carolina as of March 31, 2020 in conjunction with its reclassification of the related assets as held for sale. The observable inputs the Company used in its revaluation were the agreed-upon prices to sell the assets.
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There were no other significant assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2020 or March 31, 2020.

NOTE 5 – FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

The following is a summary of gross loans receivable by Customer Tenure as of:
Customer TenureDecember 31, 2020
0 to 5 months$109,146,394 
6 to 17 months140,042,981 
18 to 35 months189,205,533 
36 to 59 months148,244,918 
60+ months677,647,591 
Tax advance loans242,898 
Total gross loans$1,264,530,315 

During the first quarter of fiscal 2021, we adopted ASU 2016-13, which replaces the incurred loss methodology for determining our provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model, using the modified retrospective approach. Upon adoption, the total allowance for credit losses increased by $28.6 million, with no impact to the consolidated statement of operations.

Based on the Company’s loan products, the purpose and the term, current payment performance is used to assess the capability of the borrower to repay contractual obligations of the loan agreements as scheduled. Current payment performance is monitored by management on a daily basis. On an as needed basis, qualitative information may be taken into consideration if new information arises related to the customer’s ability to repay the loan. The Company’s payment performance buckets are as follows: current, 30-60 days past due, 61-90 days past due, 91 days or more past due.

The following tables provide a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at December 31, 2020:

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Term Loans By Origination
LoansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$1,096,454,268 $53,542,759 $2,329,906 $128,216 $10,211 $3,063 $1,152,468,423 
30 - 60 days past due42,220,508 4,099,955 272,431 58,886 8,142 168 46,660,090 
61 - 90 days past due23,939,973 2,640,530 158,794 23,586 1,198 574 26,764,655 
91 or more days past due31,674,388 6,339,220 325,237 46,724 6,639 2,041 38,394,249 
Total$1,194,289,137 $66,622,464 $3,086,368 $257,412 $26,190 $5,846 $1,264,287,417 
Term Loans By Origination
Tax advance loansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$7,920 $ $ $ $ $ 7,920 
30 - 60 days past due9,305      9,305 
61 - 90 days past due11,647      11,647 
91 or more days past due211,779 2,247     214,026 
Total$240,651 $2,247 $ $ $ $ $242,898 
Total gross loans$1,264,530,315 

The following tables provide a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at December 31, 2020:
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Term Loans By Origination
LoansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$1,082,056,393 $48,598,283 $1,885,402 $74,695 $270 $831 $1,132,615,874 
30 - 60 days past due46,120,163 2,687,437 146,140 15,455   48,969,195 
61 - 90 days past due27,167,688 2,234,188 81,559 945   29,484,380 
91 or more days past due38,944,893 13,102,556 973,268 166,317 25,919 5,015 53,217,968 
Total$1,194,289,137 $66,622,464 $3,086,369 $257,412 $26,189 $5,846 $1,264,287,417 
Term Loans By Origination
Tax advance loansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$63 $ $ $ $ $ $63 
30 - 60 days past due50      50 
61 - 90 days past due2,744      2,744 
91 or more days past due237,794 2,247     240,041 
Total$240,651 $2,247 $ $ $ $ $242,898 
Total gross loans$1,264,530,315 

The allowance for credit losses is applied to amortized cost, which is defined as the amount at which a financing receivable is originated, and net of deferred fees and costs, collection of cash, and charge-offs. Amortized cost also includes interest earned but not collected.

Credit Risk is inherent in the business of extending loans to borrowers and is continuously monitored by management and reflected within the allowance for credit losses for loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s gross loans receivable portfolio. In estimating the allowance for credit losses, loans with similar risk characteristics are aggregated into pools and collectively assessed. The Company’s loan products have generally the same terms therefore the Company looked to borrower characteristics as a way to disaggregate loans into pools sharing similar risks.

In determining the allowance for credit losses, the Company examined four borrower risk metrics as noted below.

1.Borrower type
2.Active months
3.Prior loan performance
4.Customer Tenure

To determine how well each metric predicts default risk the Company uses loss rate data over an observation period of twelve months at the loan level.

The information value was then calculated for each metric. From this analysis management determined the metric that had the strongest predictor of default risk was Customer Tenure. The Customer Tenure buckets used in the allowance for credit loss calculation are:

1.0 to 5 months
2.6 to 17 months
3.18 to 35 months
4.36 to 59 months
5.60+ months
15

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Management will continue to monitor this credit metric on a quarterly basis.

Management estimates an allowance for each Customer Tenure bucket by performing a historical migration analysis of loans in that bucket for the twelve most recent historical twelve-month migration periods, adjusted for seasonality. All loans that are greater than 90 days past due on a recency basis and not written off as of the reporting date are reserved for at 100% of the outstanding balance, net of a calculated Rehab Rate. Management considers whether current credit conditions might suggest a change is needed to the allowance for credit losses by monitoring trends in 60-day delinquencies, FICO scores and average loan size as compared to metrics in the historical migration period. Due to the short term nature of the loan portfolio, forecasted changes in macroeconomic variables such as unemployment do not have a significant impact on loans outstanding at the end of a particular reporting period. Therefore, management develops a reasonable and supportable forecast of losses by comparing the most recent 6-month loss curves as compared to historical loss curves to see if there are significant changes in borrower behavior that may indicate the historical migration rates should be adjusted. If an adjustment is made as a result of the forecast, then the Company has elected to immediately revert back to historical experience past the forecast period.

The following table presents a roll forward of the allowance for credit losses on our gross loans receivable for the three and nine months ended December 31, 2020 and 2019.
Three months ended December 31,Nine months ended December 31,
2020201920202019
Beginning balance109,601,359 $101,469,313 $96,487,856 $81,519,624 
Impact of ASC 326 adoption — 28,628,368 — 
Provision for credit losses28,857,443 55,219,470 80,608,470 149,478,577 
Charge-offs(29,239,780)(46,850,430)(106,865,225)(128,978,851)
Recoveries4,248,339 3,231,288 14,607,892 11,050,291 
Net charge-offs(24,991,441)(43,619,142)(92,257,333)(117,928,560)
Ending Balance$113,467,361 $113,069,641 $113,467,361 $113,069,641 

The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at December 31, 2020:

Days Past Due - Recency Basis
Customer TenureCurrent30 - 6061 - 90Over 90Total Past DueTotal Loans
0 to 5 months$91,287,471 $6,542,056 $4,492,845 $6,824,023 $17,858,924 $109,146,395 
6 to 17 months118,906,270 7,443,204 5,183,990 8,509,517 21,136,711 140,042,981 
18 to 35 months171,201,659 7,495,044 4,324,184 6,184,645 18,003,873 189,205,532 
36 to 59 months136,570,735 5,156,489 2,804,847 3,712,847 11,674,183 148,244,918 
60+ months634,502,288 20,023,296 9,958,789 13,163,218 43,145,303 677,647,591 
Tax advance loans7,920 9,305 11,647 214,026 $234,978